Fiscal cliff means dire consequences for San Diego

I was a participant in a recent meeting with the White House Business Council regarding the fiscal cliff. The president’s advisers and Department of Commerce representatives asked our delegation of business leaders to describe what sequestration meant to each of us in one word. A few examples: disruptive, concern, urgency, responsibility.

With all the noise surrounding the fiscal cliff and neither party able to broker a solution so far, business leaders haven’t forgotten a key fact driving this debate: going off the fiscal cliff would be devastating to every sector of our economy. Most visible in San Diego would be the effect on our military economy. One in four jobs in San Diego is tied to the military and defense, according to research conducted by the San Diego Military Advisory Council.

San Diego Regional Economic Development Corp. is part of a coalition of senior business leaders, including the San Diego Chamber of Commerce and CONNECT, focused on the current issues surrounding the federal budget and how these issues affect San Diego’s military assets. These assets are key to our regional economy and global competitiveness.

San Diego is home to the largest concentration of military in the world. This includes uniformed military, defense contracting and civilian employment, and related support employment. San Diego is the home port for more than 60 percent of the ships in the Pacific Fleet. Expertise in the defense-related research and development includes command and control systems, reconnaissance and surveillance systems, unmanned vehicles and cyber security.

Defense-related spending contributes $20.6 billion to the regional economy and creates jobs in a wide range of sectors including engineering, construction, shipbuilding, health care, research and other support services.

In San Diego, more than 310,000 jobs are tied to the military and defense. A 10 percent cut could result in a loss of 30,000 jobs. That’s more than the total employment of some of our technology industry sectors. The region’s military and defense jobs include 100,000 active duty and 30,000 full-time civilian workers, and 26,000 civilian employees working for the Department of Defense or Department of Veterans Affairs.

I am a military “brat.” My father was in the Air Force and I spent most of my life on military bases in country and overseas. I grew up watching the dedication of the military. It’s evident here in San Diego and it’s critical for the country.

Sequestration (automatic spending cuts that will be triggered if a budget resolution is not passed) wouldn’t just mean a loss of jobs or higher taxes – it would lead to a double-dip recession and higher unemployment. These cuts would hurt families.

That’s an option San Diego and America can’t afford as we recover from the worst recession of our lifetimes. There is no excuse for allowing a self-inflicted wound to cripple our economic growth, especially at a time when our economy is bouncing back.

For San Diego, the goal has to be to avoid sequestration through a balanced approach. That means both spending cuts and revenue increases must be on the table – including tax-rate increases. But gains in revenue, currently tied to the expiration of existing tax cuts, must be handled in a way that is not too much of a shock to the system. Without resolution, the average family is looking at an annual tax increase of approximately $2,200 which would immediately severely affect consumer confidence. Longer term, some economists predict that the tax increases would slow the growth in GDP by 1.4 percent.